Chatham Steel Corporation v. Mitchell Welding, Inc. et al

Filing 34

MEMORANDUM OF OPINION AND ORDER granting in part and denying in part 28 Motion for Summary Judgment, specifically, granting Pltf's Motion with respect to Counts I and IV, and in all other respects, denying Pltf's Motion. Signed by District Judge Martin Reidinger on 8/1/16. (ejb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:15-cv-00083-MR
CHATHAM STEEL CORP., A Foreign
Corporation

)
)
)
Plaintiff,
)
)
vs.
)
)
MITCHELL WELDING, INC., A North
)
Carolina Corporation, FRED L. STOUT, )
an individual, JOHN C. STOUT, an
)
individual and CLARANN STOUT
)
DIXON, an individual
)
)
Defendants.
)
)

MEMORANDUM OF
OPINION AND ORDER

THIS MATTER is before the Court on the Plaintiff’s Motion for
Summary Judgment [Doc. 28].
I.

PROCEDURAL BACKGROUND
On April 24, 2015, the Plaintiff filed its Complaint against the

Defendants, alleging diversity of citizenship and an amount in controversy
exceeding $75,000. [Doc. 1]. In its Complaint, Plaintiff alleges four counts
against the Defendants. [Id.]. In Count I, breach of contract, Plaintiff alleges
that Mitchell Welding, Inc. (“Mitchell”) purchased $763,531.57 in materials
from the Plaintiff pursuant to its credit agreement with Plaintiff, and that
Mitchell has failed to pay for the materials pursuant to the terms of that credit

agreement. [Id. at 4-5]. In Count II, breach of contract, Plaintiff alleges that
John C. Stout and Clarann Dixon Stout executed a promissory note in favor
of Plaintiff in December 2011, in the original principal amount of $547,570.00.
Plaintiff further alleges that the Defendants have failed to make payments
pursuant to the terms of that note from December 2013 to present, and that
a balance remains due and owing in the principal amount of $392,750.50.
[Id. at 5-7]. In Count III, Plaintiff alleges an action on open account against
Mitchell in the principal amount of $763,531.57, which has been due and
owing since August 22, 2014. [Id. at 7-8]. In Count IV, action on personal
guaranty, Plaintiff alleges that Fred Stout and John Stout executed personal
guaranties for Mitchell’s account with the Plaintiff, that the Plaintiff has
demanded payment from the Defendants for the amount owed by Mitchell,
and that the Defendants have failed to pay pursuant to their guaranties. [Id.
at 8-9]. The Plaintiff later amended Count IV of its Complaint to add Clarann
Dixon Stout as a third defendant-guarantor of Mitchell’s indebtedness to
Plaintiff. [Doc. 17].
The Defendants timely answered Plaintiff’s Complaint and Amended
Complaint.
Complaint)].

[Docs. 10, 18, 23 (Amendment to Answer to Amended
On June 15, 2016, Plaintiff filed a Motion for Summary

Judgment. [Doc. 28]. The Defendants did not file a Response.
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[See

Docket]. On July 13, 2016, the Plaintiff and Defendant Fred Stout filed a
stipulation of dismissal as to Fred Stout [Doc. 32], and the remaining parties
stipulated to waiving a jury trial [Doc. 33].
This matter is now ripe for disposition.
II.

DISCUSSION
A party seeking summary judgment must present a forecast of

evidence that, if believed by a jury, would support judgment in favor of the
movant. See Custer v. Pan American Life Ins. Co., 12 F.3d 410, 416 (4th
Cir. 1993).

Where, as here, the Defendants do not file a response to

Plaintiff’s motion for summary judgment, this Court treats the Plaintiff’s
forecast of evidence as undisputed. See Id. In the instant matter, even
though the Defendants have not controverted any of the evidence forecasted
by the Plaintiff, the undisputed evidence is inadequate to support judgment
in favor of the Plaintiff on all counts.
As an initial matter, in Plaintiff’s Motion for Summary Judgment, the
Plaintiff references the deposition testimony of Clarann Stout Dixon, but the
Plaintiff has not presented any part of that deposition transcript to the Court.
Therefore, Plaintiff’s arguments that rely upon this testimony are
unsupported by the record. The Plaintiff has, however, presented for the
record the affidavit of Britt Griffin. [Doc. 29-4]. Moreover, because the
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Defendants did not respond to Plaintiff’s motion for summary judgment, the
facts established by Griffin’s testimony, summarized below, are treated as
undisputed for the purposes of this motion. See Custer, 12 F.3d at 416.
On or about February 16, 1999, Defendant Mitchell executed a credit
application and agreement with Plaintiff Chatham Steel Corporation
(“Chatham”),

whereby

Chatham

agreed

to

supply

structural

and

miscellaneous steel materials to Mitchell on open account. [Doc. 29-4 at 3].
At that time, Defendant John C. Stout executed a personal guaranty for
Mitchell. [Id.].1 On or about July 13, 2007, Mitchell executed a new credit
application with Chatham. [Id.] “Defendants John C. Stout and Clarann S.
Dixon executed personal guaranties as part of the 2007 credit application
whereby they both guaranteed the debts of Mitchell.” [Id.]. These guaranties
provided that the guarantors would make payment “when due and not of
collection only . . . .” [Doc. 29-4 at 13]. Between October 16, 2012 and
August 22, 2014, pursuant to its credit applications, Defendant Mitchell
purchased goods from the Plaintiff in varying amounts which, when

1

The 1999 guaranty appears to limit liability to $20,000. All the invoices at issue herein,
however, are subsequent to the 2007 guaranty, which does not have such limitation.
Hence, the limitation of liability in the 1999 guaranty appears to be of no consequence in
this matter.
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combined, equal a principal indebtedness in the amount of $763,531.57.
[Doc. 29-4 at 4, 15-22].
Based upon the undisputed facts above, this Court makes the following
conclusions of law.
A.

Count I: Breach of Contract

These undisputed facts show that Plaintiff is entitled to judgment as a
matter of law against Defendant Mitchell with regard to the debt owed for the
goods purchased on credit, and that the aggregate amount of such debt is
$763,531.57.
B.

Count II: Breach of Contract

As to Count II, the Plaintiff has failed to show that it is entitled to
judgment as a matter of law against Defendants John C. Stout and Clarann
Dixon Stout, because the movant-Plaintiff has failed to present a forecast of
evidence in support of its claim. See Celotex Corp. v. Catrett, 477 U.S. 317,
331 (1986) (noting that movant who bears the burden of persuasion must
support its motion with “credible evidence” specified in Rule 56(c)).
In the instant matter, Plaintiff’s evidence -- the affidavit of Britt Griffin –
says nothing of a promissory note executed by Defendants Stout and Dixon.
To the contrary, Griffin testifies that Mitchell is “indebted to Plaintiff in the
amount of $392,750.50 pursuant to an oral agreement . . . .” [Doc. 29-4 at
5

4].2 Plaintiff’s Complaint, on the other hand, alleges a claim against Stout
and Dixon, not Mitchell. [Doc. 1 at ¶¶ 24-28]. The Complaint was unverified
[See Doc. 1], however, and the Defendants denied the relevant allegations
in their Answer. [Doc. 10 at ¶¶ 24-28].
A plaintiff seeking summary judgment must present a forecast of
evidence supporting its allegations, such as affidavits, depositions, or
stipulations. Fed. R. Civ. P. 56. Because the Plaintiff has presented no
record to support its entitlement to judgment on the allegations it has made
in Count II, Plaintiff’s Motion for Summary Judgment must be denied.
C.

Count III: Action on Account

In Count III of its Complaint, Plaintiff alleges an action on open account
against Mitchell in the principal amount of $763,531.57, which has been due
and owing since August 22, 2014. Notably, the amount complained of as
being owed pursuant to an “open account” in Count III appears to be the
same debt that Plaintiff alleges is owed for unpaid invoices in Count I.
Moreover, the Griffin affidavit presents no record regarding the alleged open
account – only that of unpaid invoices. [See Doc. 29-4 at 4]. Therefore, to

2

In addition to identifying a defendant against whom a claim for breach of oral agreement
has not been made, Griffin’s testimony fails to specifically identify the alleged oral
agreement, its terms, the parties thereto, or whether the agreement is in default. [See
Doc. 29-4 at 4].
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the extent that Count III represents a claim for a debt that is different from
the debt pursued in Count I, it is unsupported by the record. To the extent
that Count III seeks a double recovery of the same debt alleged in Count I, it
is denied. Accordingly, summary judgment as to Count III is denied.
D.

Count IV: Action on Personal Guaranty

The undisputed facts show that Defendants John C. Stout and Clarann
Stout Dixon guaranteed the debts of Mitchell incurred pursuant to the credit
agreement. Plaintiff, being entitled to summary judgment against Mitchell on
Count I, is also entitled to judgment as a matter of law in the amount of
$763,531.57 against Defendants John C. Stout and Clarann Stout Dixon.
ORDER
IT IS, THEREFORE, ORDERED that the Plaintiff’s Motion for
Summary Judgment [Doc. 28] is GRANTED IN PART AND DENIED IN
PART.

Specifically, the Plaintiff’s Motion is GRANTED with respect to

Counts I and IV. In all other respects, the Plaintiff’s Motion is DENIED.
IT IS SO ORDERED.
Signed: August 1, 2016

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